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Did the walls have ears?

ABC Radio Australia - February 23, 2014

Claims that Australia spied on East Timorese negotiators during oil and gas treaty talks in 2004 are at the centre of a legal row that could throw the treaty into doubt. Did Australia seek and gain an unfair advantage for itself and the petroleum company Woodside? Hagar Cohen investigates.

As Australia and East Timor lock horns over claims that Australia bugged sensitive treaty talks, one of the lead negotiators for East Timor has spoken out.

American diplomat Peter Galbraith negotiated a multi-billion dollar oil and gas treaty that divides resources in the Timor Sea between the two countries. He says the alleged spying would have given Australia a huge advantage during the negotiations.

These were in essence negotiations about money. So money or share of oil, and if you know what the Timorese are going to settle for that is incredibly valuable.

John Galbraith, US diplomat on the East Timorese negotiation team

The allegation, instigated by a decorated former Australian spy, is now at the centre of a legal row that's thrown the treaty into doubt. The Timorese say the former spy became outraged about a secret operation to bug East Timor's negotiators in 2004 and decided to blow the whistle.

East Timor's lawyer Bernard Collaery has told the ABC's PM program that a team of Australian Secret Intelligence Service (ASIS) technicians travelled to East Timor under the cover of an Australian aid program to renovate the cabinet room in Dili. He alleges the ASIS technicians then installed listening devices into the walls.

Australian journalist Paul Cleary was a communications advisor in Dili for the East Timor government. He says the newly renovated room was used extensively by the negotiating team.

'It was the PM's private meeting room. That's where he held his own meetings with ministers and that's where the negotiating team met and that was where we briefed the PM on the negotiating strategy and what Timor was pressing for, and the position that we'd be putting,' says Cleary.

The alleged spying operation was a shock to Galbraith: 'I was surprised that Australia would bug the offices of the prime minister. It's a bit reminiscent of what went on in the Cold War period,' he says.

Over several years, Galbraith led the Timorese negotiating team in their talks with Australia over the carve-up of the resources in the Timor Sea.

'These were in essence negotiations about money. So money or share of oil, and if you know what the Timorese are going to settle for that is incredibly valuable,' he says.

'But also if you know in advance what negotiating tactics the East Timorese are going to take. We have been dealing with Australian negotiators for five years... I had judgements about how each one of them was going to react, who was more open to our arguments, who had influence with the key decision makers, so again if the Australians saw it as our perceptions of their negotiating team, that is helpful.'

'Finally, we ended up with quite a large negotiating team, and there were divisions amongst us, so if the Australians know what those divisions are, they can tell the divisions on our side.'

The current East Timorese government, led by Xanana Gusmau, now says the country was tricked into signing the oil and gas treaty known as CMATS. It wants the deal scrapped.

The case will be decided in the Court of Arbitration in The Hague. The East Timorese will need to prove the bugging happened and that they were deceived into signing the treaty.

However, spying allegations are hard to prove, particularly as no-one from the Australian government-past or present-is prepared to acknowledge them.

As foreign minister at the time, Alexander Downer led the Australian negotiating team. He says the Timorese should keep their word on the treaty.

'The East Timorese ratified the agreement and it was ratified by both sides, so we have an agreement, and now they've come to us and said for whatever reasons, they can put forward a range of different reasons, they want to tear up that agreement,' says Downer.

'It creates a huge problem. It means in future, if you negotiate an agreement with East Timor, are you sure having signed an agreement that that's the end of it?'

Downer refuses to be drawn into discussions about the bugging, and he declined to respond to Background Briefing's questions about the appropriateness of spying on a country during sensitive talks over the oil and gas treaty.

'Having been the foreign minister of Australia for 12 years I'm going to maintain the position that all former ministers have maintained and I'm not going to go into those intelligence issues,' he says.

Downer says he is not concerned about any suggestions that this scandal may have an effect on his legacy. 'I don't think I mind about my legacy. I just mind about doing the right thing,' he says.

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